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Connecticut Bankruptcy Law Blog

How are zombies real in the bankruptcy world?

You might think that zombies are merely a product of Hollywood and books. While this is true when it pertains to the undead coming for your brains, a different type of zombie can threaten Connecticut homeowners who are facing a foreclosure. The term for a home that is languishing in the foreclosure process is a zombie foreclosure.

The name sounds amusing, but zombie foreclosures are anything but funny. As CNBC describes, a foreclosed home typically becomes zombified when homeowners feel they have no other option than to walk away from their house and abandon their mortgages. Rather than complete the foreclosure and put the house back on the market, many banks would allow the home to sit without selling it to new owners, depreciating in value and lowering the values of other homes in the neighborhood. Fortunately for you and others, the practice of allowing abandoned homes to become zombies occurs less often than it did just after the housing market crash.

What is Connecticut’s small loan law?

You may have some familiarity with the concept of payday loans, especially if you are not a native Connecticut resident and come from a state where payday loans are legal. State laws restrict payday lending to protect you and other consumers from the egregious abuses that often accompany such loans. However, as previous posts on our blog have explained, there are other ways that vulnerable consumers can be victimized by predatory lending.

You may be interested in learning about the state’s small loan law, which restricts payday lending, as the Connecticut General Assembly explains. The law works in the following ways:

  • The law prohibits the assignment of wages as loan collateral.
  • A small loan lender must be licensed with the Banking Department.
  • Interest rates on a small loan may be higher than traditional loans but are often significantly lower than astronomical payday loan rates.
  • Lenders, including credit unions, banks and pawnbrokers, can offer up to $15,000 for a small consumer loan.

Medical expenses responsible for many bankruptcies

As many Americans struggle to keep up with their credit card debt, mortgage and other expenses, a number of people are forced to file for bankruptcy as a last resort. The most common cause of bankruptcy, however, is related to medical debt. Many people in Connecticut and across the United States can no longer keep up with extensive health care expenses. It is reported that one in three families in the U.S. struggle to pay for medical treatments, racking up credit card debt and draining their bank accounts in the process.

One reason why medical expenses have mounted may be the issue of high deductibles, copays and premiums. People are forced to pay high premiums to receive their insurance coverage, but then must pay a high out-of-pocket deductible before the insurance plan starts to cover anything. Furthermore, there are co-pays during that time and even after the deductible has been met.

An automatic stay may stop creditor harassment

When people are behind on their credit card payments, mortgage payments or have excessive medical debt, they may begin to receive creditor calls. At first, the calls may start out as a friendly reminder for clients to make a payment on their loan. As time passes, however, those calls can turn a bit more sinister and, in some cases, become harassing. Once people file their paperwork for Chapter 7 bankruptcy, an automatic stay moves in place, which prohibits creditors from contacting debtors regarding their overdue payments.

Creditor harassment can become a huge problem, as companies may threaten to file a lawsuit, use profane language, garnish wages from paychecks, reclaim property and even pursue legal action. These practices are illegal under the Fair Debt Collection Practices Act. With an automatic stay, creditors are unable to harass debtors through phone calls at all hours of the day, wage garnishment, initiating or pursuing lawsuits or threatening through other means.

Relief for credit card debt

When Connecticut residents realize they are overwhelmed with credit card debt, they may sometimes feel like this debt will never go away. However, there are several strategies people can use to remove this debt.

If people want to get out of debt, it is a good idea for them to understand exactly how much they owe. Time magazine says that people should typically sit down and create a list of how much debt they have on each credit card. This list should also include the interest rates so people know how much they are spending on interest each month. Once they have made this list, people may want to look at their budget so they know how much money they can put toward paying off their debt.

College graduates may find relief from their student debt

It is likely that many Connecticut residents either have one or more student loans or know someone who does. The overwhelming level of debt and difficulty paying it off has been well-documented recently in both national and local news.

The Connecticut Post reports that Connecticut college graduates have the third highest average student debt in the US and are ranked 20th regarding how the indebtedness affects them after graduation. Except for a mortgage, student loans are the most significant component of the average household debt. In this situation, the level of student loan debt is calculated using five factors that include the following:

  • Share of student loan borrowers 50 and older
  • Percentage of graduates with student loan debt
  • Share of student loans categorized as past-due or in default
  • Average student debt
  • Student debt to income ratio

What should I do after filing Chapter 13?

If you have filed for Chapter 13 bankruptcy in Connecticut and went through the process of setting up your plan, then you are now ready to put the plan to use. What you do after you file is very important. It will greatly affect your finances and your business if you do not follow the plan. The US Courts notes there are a few things that you need to keep in mind as you continue forward in the bankruptcy process.

The most important thing you have to do is make your payments on time. This should be very easy to do because payments should come directly through payroll deductions. If you miss a payment, you could face serious issues with your case and face liquidation of your assets.

What can I do to avoid foreclosure?

The prospect of foreclosure is daunting for Connecticut homeowners. However, if you’re unable to make mortgage payments that will be exactly what you’re faced with. Some homeowners are able to pursue alternatives, which can prevent a lengthy and often costly foreclosure process. Realtor.com explains 3 different ways to avoid foreclosure that might be available to you.

Deed in lieu of a foreclosure

The new phenomenon of gray bankruptcy

At the Law Offices of Charles A. Maglieri in Connecticut, we see an ever growing number of senior citizens coming to us for help in filing bankruptcy. As the New York Times recently reported, if you are 65 or older, your inadequate pension and personal savings, plus the rising costs of medical care and prescription drugs, may have put you in the position where bankruptcy is your only realistic option. A recent study shows that seniors such as you represent 12.2 percent of all bankruptcy filers today. In 1991, seniors represented only 2.1 percent of filers.

Unfortunately, the dream of one’s senior years also becoming the golden years no longer applies to the majority of Americans. Many factors, including the following, have made it impossible for today’s seniors such as you to retire in comfort:

  • Extensive debt
  • Little or no savings
  • Medicare coverage gaps
  • Skyrocketing medical costs
  • Longer waits for Social Security benefits

What is the HAFA program?

If your debt situation has gotten out of hand and you fear losing your Connecticut home to foreclosure, you may wish to consider the Home Affordable Foreclosure Alternatives program. As HomeOwnership.org explains, HAFA is a federal governmental program that gives you a foreclosure alternative if you wish to short sell your home or give a deed in lieu of foreclosure to your mortgage lender.

You must meet all six of the following criteria to receive HAFA help:

  1. You must be undergoing a documented financial hardship.
  2. You must have purchased your home more than 12 months ago.
  3. You must have a first mortgage less than $729,750.
  4. You must have obtained your mortgage prior to Jan. 1, 2009.
  5. You must have had no felony convictions in the preceding 10 years for such real estate related crimes as theft, larceny, fraud, tax evasion or money laundering.
  6. Your mortgage must be owned or guaranteed by Fannie Mae and Freddie Mac.

Discuss Your Case With A
Respected Bankruptcy Attorney

Contact my office to discuss your debt relief needs directly with me as your lawyer. I offer a free initial consultation to all new clients where you can learn more about your legal options and what I can do to help you. I am available during regular business hours and by appointment at other times. You can reach me by phone at 860-242-0574 and 860-952-3674 or via email.

My law firm is a debt relief agency as so designated by Congress in the year 2005. I help people file for bankruptcy relief under Title 11 of the United States Code, known as the Bankruptcy Code.

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Bloomfield Office
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Bloomfield, CT 06002

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